17 In light of the above discussion, this study explored the funding model and business operation of SMSEs. Furthermore, the study investigated the stakeholders involved and their information needs and developed a social performance measurement framework using social; environmental;
cultural; human; and educational metrics from a developing country perspective, with particular reference to small and medium social enterprises in KwaZulu-Natal, South Africa.
This study attempted to fill the gap in existing performance measurement methods and the other frameworks for the under-researched issue of qualitative performance measurement of small and medium social enterprises by suggesting a new framework that is able to address problems relating to evaluating the social performances of the small and medium social enterprises in the KwaZulu- Natal, by using the social performance metrics related to the social mission, enterprise activities, and stakeholder involvement underpinning the study.
The next section discusses the theoretical framework that guides the study.
18 to social responsibility practices and weighed these drivers and barriers to assign them to a category.
In the social entrepreneurship literature, there is regular reference to stakeholders. For Santos (2012), the best way for SEs to achieve their desired outcomes is to empower stakeholders to become an integral part of the solution and put mechanisms and systems in place to reduce stakeholder dependency. In their comparative study of conceptions of social entrepreneurship and SEs in Europe and the United States of America (USA), Defourny and Nyssens (2010) identified different types of relationships between SEs and their stakeholders, linked to differences in their respective institutional environments, which inform the presence and prevalence of different social enterprise models in these different contexts.
Small and medium social enterprises may be defined according to their relationships with the stakeholder groups that focus on their social and environmental missions. These key mission stakeholders (including the environment) are the reason for these organizations’ existence (the purpose), and social enterprises measure their success. They are assessed according to their impact on them (Littlewood & Holt, 2018a). Performance measurement of SMSEs thus requires a clear identification of the various stakeholders and their requirements. Identifying stakeholders enables a clear assessment of the social performance of the enterprise by these stakeholder groups. This may be done in a visual presentation, as Fletcher et al. (2003) suggested. They presented a stakeholder map that reflected the position of all internal and external stakeholders. When all stakeholders are placed in their respective areas, it is possible to determine the role played by each member. Additionally, it helps to understand their perspectives and requirements and measure the effect of the enterprises’ performance on them.
In small and medium social enterprises, both nature of producing goods and service to attain revenue for sustaining the enterprise than profit maximization and providing solutions for community problems to maintain social value must be considered (Ebrahim and Rangan, 2014) . The hybrid nature of small and medium social enterprises requires both financial and non-financial dimensions of performance measurement system (Costa & Anderaus, 2020). The performance measurement system of SMSEs require the constant creation of economic value in order to survive over time and guarantee that they will be able to continue with their social mission (Ramus &
Vaccaro, 2017).
19 In recent literature PMS and social enterprise accountability debate has been driven by the “theory- driven evaluation” method (Rogers, 2007). The method elaborates how organizations different activities and programmes cause projected outcomes and impacts (Ebrahim and Rangan, 2014;
Costa and Andreaus, 2020). This method applies the impact value chain or logic chain of result (Clark et al.,2004), in which organizational inputs such as financial and non-financial resources (money, staff time, capital assets, etc.) are utilized to support activities and services (e.g. health care services, job training, skill endorsement, consultancy, etc.). These activities eventually result in the delivery of outputs to a target beneficiary population (i.e. the immediate result that SEs can measure or assess directly). The outcome of the SEs activity (e.g., change in beneficiaries attitudes, behaviours, knowledge, skills and/or status)) can be driven from the identified output. The short term results and changes can be transferred into a societal impact on the large scale for the broader society in the long term (Ebrahim and Rangan, 2010; Ebrahim et al.,2014; Arena et al., 2015; Costa and Pesci, 2016; Costa and Andreaus, 2020).
In theory of change, organization use input to transfer into output through process in order to attain output and outcome which leads to the long-term impact. Input is the knowledge, equipment and financial resources utilized to sustain the activities or processes of service delivery (EVPA European Venture Philanthropy Association, 2013). In SMSEs, various input indicators related to different stakeholders (i.e. either internal or external such as employees, customers, suppliers, beneficiaries, and institutions) can be maintained. For instance Costa and Andreaus (2020:299), found out that within the category of stakeholders identified, the case study social enterprise
“monitors the number of people engaged in the provision of the homecare service (both employees and members), the financial resources adopted and the buildings in which the homecare assistance is delivered.”
All of the resource ( financial or non-financial) direct to a set of activities that could be explained as the set of projects conducted by the SEs to create value for the stakeholders. SEs undertake various activities in order to achieve their social mission (Ormiston, 2019). Through the analysis of activities conducted, it is also possible to reflect the output of the social enterprise, which reveals initiative short term results (Costa and Andreaus, 2020). Literature exhibits, the challenges SEs expressed in terms of defining and measuring non-financial metrics that defines the social value of their enterprises. This study found out by discussing and refining social mission and the
20 organization strategies, relating to the need and information requirement of the stakeholders, social enterprises can identify the measurement for the outcome of their activity (see Figure 6.1).